CBSH 8-K
Commerce Bancshares Inc /Mo/ (CBSH)
8-K
2023-07-19
For: 2023-07-19
View Original
Added on
April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 19, 2023
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(816 ) 234-2000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of class | Trading symbol(s) | Name of exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
A copy of the press release issued July 19, 2023 by Commerce Bancshares, Inc. announcing Second Quarter 2023 earnings is furnished under Item 2.02 of this Current Report on Form 8-K as Exhibit 99.1. Additionally, a slide presentation for investors and analysts is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K, including the exhibits, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information in this Current Report on Form 8-K, including the exhibits, shall not be deemed to be incorporated by reference into the filings of Commerce Bancshares, Inc. under the Securities Act of 1933, as amended.
All information included in this Current Report on Form 8-K is available on the Company’s website at https://investor.commercebank.com/news-info/financial-news-releases/default.aspx.
Item 9.01 Financial Statements and Exhibits
Exhibits
104 The XBRL tags on the cover page of this Form 8-K are embedded within the Inline XBRL document.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COMMERCE BANCSHARES, INC. | |||||||||||
| By: | /s/ Paul A. Steiner | ||||||||||
| Paul A. Steiner | |||||||||||
Controller (Chief Accounting Officer) | |||||||||||
Date: July 19, 2023
Exhibit 99.1
Exhibit 99.1
 | CBSH | ||||
1000 Walnut Street / Suite 700 / Kansas City, Missouri 64106 / 816.234.2000 | |||||
FOR IMMEDIATE RELEASE:
Wednesday, July 19, 2023
COMMERCE BANCSHARES, INC. REPORTS
SECOND QUARTER EARNINGS PER SHARE OF $1.02
Commerce Bancshares, Inc. announced earnings of $1.02 per share for the three months ended June 30, 2023, compared to $.92 per share in the same quarter last year and $.95 per share in the first quarter of 2023. Net income for the second quarter of 2023 amounted to $127.8 million, compared to $115.8 million in the second quarter of 2022 and $119.5 million in the prior quarter.
For the six months ended June 30, 2023, earnings per share totaled $1.97, compared to $1.84 for the first six months of 2022. Net income amounted to $247.2 million for the six months ended June 30, 2023, compared to $233.9 million in the comparable period last year. For the year to date, the return on average assets was 1.55%, and the return on average equity was 18.78%.
“Commerce delivered strong results in the second quarter,” said John Kemper, President and Chief Executive Officer. “Against a backdrop of elevated interest rates, the Company produced record revenues, showing strength in both our net interest and non-interest income categories. These results reflect the ability of our diversified business model to perform across economic cycles. Our low loan-to-deposit ratio positioned us to meet loan demand across our footprint and provided opportunities for our teams to welcome new customer relationships.”
On deposit balances, Kemper added, “Our customer deposits increased during the quarter, helping to accommodate loan growth. On top of this, the Company took steps to add short-term brokered deposit funding, increasing our liquidity cushion in the wake of the first quarter’s industry disruption. This short-term liquidity build impacted our net interest margin but was neutral to net interest income and reflects our conservative posture in times of economic uncertainty.
We are confident in our liquidity and capital levels, and credit performance remains excellent.”
Second Quarter 2023 Financial Highlights:
•Net interest income was $249.5 million, a $2.1 million decrease from the prior quarter. The net yield on interest earning assets decreased 14 basis points to 3.12%.
•Non-interest income totaled $147.6 million, an increase of $8.2 million compared to the same quarter last year.
•Non-interest expense totaled $227.6 million, an increase of $14.1 million compared to the same quarter last year.
1
Exhibit 99.1
•Average loan balances totaled $16.7 billion, an increase of $265.2 million, or 1.6%, over the prior quarter.
•Total average available for sale debt securities decreased 7.2%, or $852.8 million, from the prior quarter to $11.0 billion, at fair value. During the second quarter of 2023, the unrealized loss on available for sale securities increased $109.2 million to $1.4 billion, at period end.
•Period end deposits increased $1.2 billion, or 4.8%, over March 31, 2023. The average rate paid on interest bearing deposits in the current quarter was 1.29%.
•The ratio of annualized net loan charge-offs to average loans was .16% compared to .17% in the prior quarter.
•The allowance for credit losses on loans decreased $632 thousand during the second quarter to $158.7 million, and at June 30, 2023, the ratio of the allowance for credit losses on loans to total loans was .94%, compared to .96% at March 31, 2023.
•Total assets at June 30, 2023 were $32.8 billion, an increase of $826.4 million, or 2.6%, over the prior quarter.
•For the quarter, the return on average assets was 1.56%, the return on average equity was 18.81%, and the efficiency ratio was 57.2%.
Commerce Bancshares, Inc. is a regional bank holding company offering a full line of banking services through its subsidiaries, including payment solutions, investment management and securities brokerage. One of its subsidiaries, Commerce Bank, leverages nearly 160 years of proven strength and experience to help individuals and businesses solve financial challenges. In addition to offering payment solutions across the U.S., Commerce Bank currently operates full-service banking facilities across the Midwest including the St. Louis and Kansas City metropolitan areas, Springfield, Central Missouri, Central Illinois, Wichita, Tulsa, Oklahoma City, and Denver. It also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids. Commerce delivers high-touch service and sophisticated financial solutions at regional branches, commercial offices, ATMs, online, mobile and through a 24/7 customer service line.
This financial news release and the supplementary Earnings Highlights presentation are available on the Company’s website at https://investor.commercebank.com/news-info/financial-news-releases/default.aspx.
* * * * * * * * * * * * * * *
For additional information, contact
Matt Burkemper, Investor Relations
(314) 746-7485
www.commercebank.com
2
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
| (Unaudited) (Dollars in thousands, except per share data) | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |||||||||||||||
| FINANCIAL SUMMARY | ||||||||||||||||||||
| Net interest income | $249,538 | $251,623 | $232,385 | $501,161 | $441,171 | |||||||||||||||
| Non-interest income | 147,605 | 137,612 | 139,427 | 285,217 | 271,196 | |||||||||||||||
| Total revenue | 397,143 | 389,235 | 371,812 | 786,378 | 712,367 | |||||||||||||||
| Investment securities gains (losses) | 3,392 | (306) | 1,029 | 3,086 | 8,192 | |||||||||||||||
| Provision for credit losses | 6,471 | 11,456 | 7,162 | 17,927 | (2,696) | |||||||||||||||
| Non-interest expense | 227,611 | 224,107 | 213,505 | 451,718 | 419,153 | |||||||||||||||
| Income before taxes | 166,453 | 153,366 | 152,174 | 319,819 | 304,102 | |||||||||||||||
| Income taxes | 35,990 | 32,813 | 32,021 | 68,803 | 63,923 | |||||||||||||||
| Non-controlling interest expense | 2,674 | 1,101 | 4,359 | 3,775 | 6,231 | |||||||||||||||
| Net income attributable to Commerce Bancshares, Inc. | $127,789 | $119,452 | $115,794 | $247,241 | $233,948 | |||||||||||||||
| Earnings per common share: | ||||||||||||||||||||
| Net income — basic | $1.03 | $0.95 | $0.92 | $1.98 | $1.84 | |||||||||||||||
| Net income — diluted | $1.02 | $0.95 | $0.92 | $1.97 | $1.84 | |||||||||||||||
| Effective tax rate | 21.97 | % | 21.55 | % | 21.66 | % | 21.77 | % | 21.46 | % | ||||||||||
| Fully-taxable equivalent net interest income | $251,757 | $253,411 | $235,010 | $505,168 | $446,403 | |||||||||||||||
Average total interest earning assets (1) | $32,412,084 | $31,568,594 | $33,839,655 | $ | 31,992,669 | $34,385,339 | ||||||||||||||
| Diluted wtd. average shares outstanding | 124,007,300 | 124,258,981 | 125,916,229 | 124,132,445 | 126,279,546 | |||||||||||||||
| RATIOS | ||||||||||||||||||||
Average loans to deposits (2) | 66.15 | % | 64.99 | % | 53.93 | % | 65.57 | % | 52.91 | % | ||||||||||
| Return on total average assets | 1.56 | 1.54 | 1.36 | 1.55 | 1.35 | |||||||||||||||
Return on average equity (3) | 18.81 | 18.75 | 16.29 | 18.78 | 15.28 | |||||||||||||||
| Non-interest income to total revenue | 37.17 | 35.35 | 37.50 | 36.27 | 38.07 | |||||||||||||||
Efficiency ratio (4) | 57.22 | 57.49 | 57.29 | 57.35 | 58.72 | |||||||||||||||
| Net yield on interest earning assets | 3.12 | 3.26 | 2.79 | 3.18 | 2.62 | |||||||||||||||
| EQUITY SUMMARY | ||||||||||||||||||||
| Cash dividends per share | $.270 | $.270 | $.252 | $.540 | $.505 | |||||||||||||||
| Cash dividends on common stock | $33,744 | $33,759 | $31,935 | $67,503 | $64,078 | |||||||||||||||
Book value per share (5) | $21.53 | $21.51 | $21.23 | |||||||||||||||||
Market value per share (5) | $48.70 | $58.35 | $62.52 | |||||||||||||||||
| High market value per share | $58.97 | $70.20 | $70.78 | |||||||||||||||||
| Low market value per share | $45.55 | $55.72 | $59.81 | |||||||||||||||||
Common shares outstanding (5) | 124,734,830 | 124,720,710 | 126,034,333 | |||||||||||||||||
Tangible common equity to tangible assets (6) | 7.70 | % | 7.92 | % | 7.56 | % | ||||||||||||||
| Tier I leverage ratio | 10.46 | % | 10.61 | % | 9.45 | % | ||||||||||||||
| OTHER QTD INFORMATION | ||||||||||||||||||||
| Number of bank/ATM locations | 272 | 275 | 279 | |||||||||||||||||
| Full-time equivalent employees | 4,680 | 4,636 | 4,579 | |||||||||||||||||
(1)Excludes allowance for credit losses on loans and unrealized gains/(losses) on available for sale debt securities.
(2)Includes loans held for sale.
(3)Annualized net income attributable to Commerce Bancshares, Inc. divided by average total equity.
(4)The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue.
(5)As of period end.
(6)The tangible common equity ratio is a non-gaap ratio and is calculated as stockholders’ equity reduced by goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights).
All share and per share amounts have been restated to reflect the 5% stock dividend distributed in December 2022.
3
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| (Unaudited) (In thousands, except per share data) | For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||||
| Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||||||||||||||||||||
| Interest income | $348,663 | $308,857 | $286,377 | $262,666 | $238,154 | $657,520 | $449,936 | |||||||||||||||||||
| Interest expense | 99,125 | 57,234 | 31,736 | 16,293 | 5,769 | 156,359 | 8,765 | |||||||||||||||||||
| Net interest income | 249,538 | 251,623 | 254,641 | 246,373 | 232,385 | 501,161 | 441,171 | |||||||||||||||||||
| Provision for credit losses | 6,471 | 11,456 | 15,477 | 15,290 | 7,162 | 17,927 | (2,696) | |||||||||||||||||||
| Net interest income after credit losses | 243,067 | 240,167 | 239,164 | 231,083 | 225,223 | 483,234 | 443,867 | |||||||||||||||||||
| NON-INTEREST INCOME | ||||||||||||||||||||||||||
| Bank card transaction fees | 49,725 | 46,654 | 44,588 | 45,638 | 43,873 | 96,379 | 85,918 | |||||||||||||||||||
| Trust fees | 47,265 | 45,328 | 44,710 | 45,406 | 46,792 | 92,593 | 94,603 | |||||||||||||||||||
| Deposit account charges and other fees | 22,633 | 21,752 | 21,989 | 24,521 | 25,564 | 44,385 | 47,871 | |||||||||||||||||||
| Consumer brokerage services | 4,677 | 5,085 | 4,518 | 5,085 | 5,068 | 9,762 | 9,514 | |||||||||||||||||||
| Capital market fees | 2,539 | 3,362 | 3,386 | 3,393 | 3,327 | 5,901 | 7,452 | |||||||||||||||||||
| Loan fees and sales | 2,735 | 2,589 | 2,566 | 3,094 | 3,246 | 5,324 | 7,481 | |||||||||||||||||||
| Other | 18,031 | 12,842 | 15,068 | 11,377 | 11,557 | 30,873 | 18,357 | |||||||||||||||||||
| Total non-interest income | 147,605 | 137,612 | 136,825 | 138,514 | 139,427 | 285,217 | 271,196 | |||||||||||||||||||
| INVESTMENT SECURITIES GAINS (LOSSES), NET | 3,392 | (306) | 8,904 | 3,410 | 1,029 | 3,086 | 8,192 | |||||||||||||||||||
| NON-INTEREST EXPENSE | ||||||||||||||||||||||||||
| Salaries and employee benefits | 145,429 | 144,373 | 138,458 | 137,393 | 142,243 | 289,802 | 278,196 | |||||||||||||||||||
| Data processing and software | 28,719 | 28,154 | 27,991 | 28,050 | 27,635 | 56,873 | 54,651 | |||||||||||||||||||
| Net occupancy | 12,995 | 12,759 | 11,774 | 12,544 | 12,503 | 25,754 | 24,799 | |||||||||||||||||||
| Marketing | 6,368 | 5,471 | 5,419 | 6,228 | 5,836 | 11,839 | 12,180 | |||||||||||||||||||
| Equipment | 4,864 | 4,850 | 5,021 | 5,036 | 4,734 | 9,714 | 9,302 | |||||||||||||||||||
| Supplies and communication | 4,625 | 4,590 | 4,446 | 4,581 | 4,361 | 9,215 | 9,074 | |||||||||||||||||||
| Other | 24,611 | 23,910 | 23,631 | 19,052 | 16,193 | 48,521 | 30,951 | |||||||||||||||||||
| Total non-interest expense | 227,611 | 224,107 | 216,740 | 212,884 | 213,505 | 451,718 | 419,153 | |||||||||||||||||||
| Income before income taxes | 166,453 | 153,366 | 168,153 | 160,123 | 152,174 | 319,819 | 304,102 | |||||||||||||||||||
| Less income taxes | 35,990 | 32,813 | 34,499 | 33,936 | 32,021 | 68,803 | 63,923 | |||||||||||||||||||
| Net income | 130,463 | 120,553 | 133,654 | 126,187 | 120,153 | 251,016 | 240,179 | |||||||||||||||||||
| Less non-controlling interest expense (income) | 2,674 | 1,101 | 2,026 | 3,364 | 4,359 | 3,775 | 6,231 | |||||||||||||||||||
| Net income attributable to Commerce Bancshares, Inc. | $127,789 | $119,452 | $131,628 | $122,823 | $115,794 | $247,241 | $233,948 | |||||||||||||||||||
| Net income per common share — basic | $1.03 | $0.95 | $1.05 | $0.97 | $0.92 | $1.98 | $1.84 | |||||||||||||||||||
| Net income per common share — diluted | $1.02 | $0.95 | $1.04 | $0.97 | $0.92 | $1.97 | $1.84 | |||||||||||||||||||
| OTHER INFORMATION | ||||||||||||||||||||||||||
| Return on total average assets | 1.56 | % | 1.54 | % | 1.65 | % | 1.48 | % | 1.36 | % | 1.55 | % | 1.35 | % | ||||||||||||
Return on average equity (1) | 18.81 | 18.75 | 21.88 | 17.84 | 16.29 | 18.78 | 15.28 | |||||||||||||||||||
Efficiency ratio (2) | 57.22 | 57.49 | 55.26 | 55.19 | 57.29 | 57.35 | 58.72 | |||||||||||||||||||
| Effective tax rate | 21.97 | 21.55 | 20.77 | 21.65 | 21.66 | 21.77 | 21.46 | |||||||||||||||||||
| Net yield on interest earning assets | 3.12 | 3.26 | 3.18 | 3.01 | 2.79 | 3.18 | 2.62 | |||||||||||||||||||
| Fully-taxable equivalent net interest income | $251,757 | $253,411 | $256,675 | $248,737 | $235,010 | $505,168 | $446,403 | |||||||||||||||||||
(1)Annualized net income attributable to Commerce Bancshares, Inc. divided by average total equity.
(2)The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue.
4
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - PERIOD END
| (Unaudited) (In thousands) | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | |||||||||||
| ASSETS | ||||||||||||||
| Loans | ||||||||||||||
| Business | $ | 5,906,493 | $ | 5,704,467 | $ | 5,441,592 | ||||||||
| Real estate — construction and land | 1,451,783 | 1,437,419 | 1,266,260 | |||||||||||
| Real estate — business | 3,621,222 | 3,486,543 | 3,215,578 | |||||||||||
| Real estate — personal | 2,980,599 | 2,952,042 | 2,836,835 | |||||||||||
| Consumer | 2,110,605 | 2,094,389 | 2,089,592 | |||||||||||
| Revolving home equity | 303,845 | 295,478 | 271,854 | |||||||||||
| Consumer credit card | 574,755 | 558,669 | 558,102 | |||||||||||
| Overdrafts | 7,237 | 6,515 | 6,814 | |||||||||||
| Total loans | 16,956,539 | 16,535,522 | 15,686,627 | |||||||||||
| Allowance for credit losses on loans | (158,685) | (159,317) | (138,039) | |||||||||||
| Net loans | 16,797,854 | 16,376,205 | 15,548,588 | |||||||||||
| Loans held for sale | 6,776 | 6,162 | 6,467 | |||||||||||
| Investment securities: | ||||||||||||||
| Available for sale debt securities | 10,414,625 | 11,228,616 | 13,700,308 | |||||||||||
| Trading debt securities | 29,412 | 41,584 | 34,195 | |||||||||||
| Equity securities | 12,266 | 12,528 | 8,546 | |||||||||||
| Other securities | 258,045 | 268,417 | 207,989 | |||||||||||
| Total investment securities | 10,714,348 | 11,551,145 | 13,951,038 | |||||||||||
| Federal funds sold | 2,750 | 27,060 | 26,000 | |||||||||||
| Securities purchased under agreements to resell | 825,000 | 825,000 | 1,450,000 | |||||||||||
| Interest earning deposits with banks | 2,568,695 | 1,341,854 | 684,994 | |||||||||||
| Cash and due from banks | 366,699 | 351,210 | 355,524 | |||||||||||
| Premises and equipment — net | 451,568 | 428,169 | 397,877 | |||||||||||
| Goodwill | 146,371 | 138,921 | 138,921 | |||||||||||
| Other intangible assets — net | 14,666 | 14,918 | 15,853 | |||||||||||
| Other assets | 936,535 | 944,212 | 860,108 | |||||||||||
| Total assets | $ | 32,831,262 | $ | 32,004,856 | $ | 33,435,370 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Deposits: | ||||||||||||||
| Non-interest bearing | $ | 8,198,849 | $ | 8,685,234 | $ | 11,102,585 | ||||||||
| Savings, interest checking and money market | 14,418,974 | 14,419,741 | 16,063,064 | |||||||||||
| Certificates of deposit of less than $100,000 | 1,543,424 | 468,667 | 404,096 | |||||||||||
| Certificates of deposit of $100,000 and over | 1,708,197 | 1,109,818 | 601,488 | |||||||||||
| Total deposits | 25,869,444 | 24,683,460 | 28,171,233 | |||||||||||
| Federal funds purchased and securities sold under agreements to repurchase | 2,878,021 | 2,784,559 | 2,234,296 | |||||||||||
| Other borrowings | 1,005,613 | 1,507,776 | 6,025 | |||||||||||
| Other liabilities | 392,956 | 346,649 | 348,503 | |||||||||||
| Total liabilities | 30,146,034 | 29,322,444 | 30,760,057 | |||||||||||
| Stockholders’ equity: | ||||||||||||||
| Common stock | 629,319 | 629,319 | 610,804 | |||||||||||
| Capital surplus | 2,921,365 | 2,919,060 | 2,682,161 | |||||||||||
| Retained earnings | 211,358 | 117,313 | 262,363 | |||||||||||
| Treasury stock | (58,389) | (59,670) | (129,588) | |||||||||||
| Accumulated other comprehensive income (loss) | (1,036,295) | (940,498) | (766,894) | |||||||||||
| Total stockholders’ equity | 2,667,358 | 2,665,524 | 2,658,846 | |||||||||||
| Non-controlling interest | 17,870 | 16,888 | 16,467 | |||||||||||
| Total equity | 2,685,228 | 2,682,412 | 2,675,313 | |||||||||||
| Total liabilities and equity | $ | 32,831,262 | $ | 32,004,856 | $ | 33,435,370 | ||||||||
5
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCE SHEETS
| (Unaudited) (In thousands) | For the Three Months Ended | ||||||||||||||||
| Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | |||||||||||||
| ASSETS: | |||||||||||||||||
| Loans: | |||||||||||||||||
| Business | $ | 5,757,388 | $ | 5,656,104 | $ | 5,478,241 | $ | 5,317,696 | $ | 5,385,181 | |||||||
| Real estate — construction and land | 1,450,196 | 1,410,835 | 1,268,900 | 1,288,721 | 1,225,267 | ||||||||||||
| Real estate — business | 3,540,851 | 3,478,382 | 3,300,697 | 3,258,128 | 3,163,508 | ||||||||||||
| Real estate — personal | 2,960,962 | 2,933,750 | 2,886,686 | 2,844,376 | 2,825,578 | ||||||||||||
| Consumer | 2,098,523 | 2,067,385 | 2,089,912 | 2,101,622 | 2,070,560 | ||||||||||||
| Revolving home equity | 300,623 | 296,748 | 293,681 | 280,923 | 272,280 | ||||||||||||
| Consumer credit card | 555,875 | 556,223 | 559,463 | 550,058 | 537,681 | ||||||||||||
| Overdrafts | 4,630 | 4,449 | 7,428 | 4,438 | 5,524 | ||||||||||||
Total loans | 16,669,048 | 16,403,876 | 15,885,008 | 15,645,962 | 15,485,579 | ||||||||||||
| Allowance for credit losses on loans | (159,068) | (150,117) | (143,285) | (137,833) | (134,670) | ||||||||||||
| Net loans | 16,509,980 | 16,253,759 | 15,741,723 | 15,508,129 | 15,350,909 | ||||||||||||
| Loans held for sale | 5,957 | 5,708 | 6,567 | 7,170 | 7,933 | ||||||||||||
| Investment securities: | |||||||||||||||||
| U.S. government and federal agency obligations | 1,035,651 | 1,099,067 | 1,055,602 | 1,113,442 | 1,119,305 | ||||||||||||
| Government-sponsored enterprise obligations | 55,751 | 87,086 | 55,732 | 55,753 | 55,762 | ||||||||||||
| State and municipal obligations | 1,532,519 | 1,793,756 | 1,990,643 | 2,052,908 | 2,126,380 | ||||||||||||
| Mortgage-backed securities | 6,316,224 | 6,454,408 | 6,605,936 | 6,847,912 | 7,158,252 | ||||||||||||
| Asset-backed securities | 2,827,911 | 3,233,757 | 3,714,092 | 3,870,953 | 4,038,113 | ||||||||||||
Other debt securities | 519,988 | 528,941 | 560,951 | 587,026 | 643,463 | ||||||||||||
| Unrealized gain (loss) on debt securities | (1,331,002) | (1,387,196) | (1,582,061) | (1,064,534) | (851,110) | ||||||||||||
| Total available for sale debt securities | 10,957,042 | 11,809,819 | 12,400,895 | 13,463,460 | 14,290,165 | ||||||||||||
Trading debt securities | 46,493 | 45,757 | 44,626 | 35,621 | 43,904 | ||||||||||||
| Equity securities | 12,335 | 12,458 | 10,534 | 8,838 | 9,094 | ||||||||||||
| Other securities | 273,587 | 229,867 | 219,354 | 208,708 | 195,090 | ||||||||||||
| Total investment securities | 11,289,457 | 12,097,901 | 12,675,409 | 13,716,627 | 14,538,253 | ||||||||||||
| Federal funds sold | 7,484 | 38,978 | 27,683 | 13,486 | 4,269 | ||||||||||||
| Securities purchased under agreements to resell | 824,974 | 825,000 | 1,174,457 | 1,379,341 | 1,703,569 | ||||||||||||
| Interest earning deposits with banks | 2,284,162 | 809,935 | 640,039 | 980,273 | 1,248,942 | ||||||||||||
| Other assets | 1,941,340 | 1,376,551 | 1,339,554 | 1,256,498 | 1,238,493 | ||||||||||||
| Total assets | $ | 32,863,354 | $ | 31,407,832 | $ | 31,605,432 | $ | 32,861,524 | $ | 34,092,368 | |||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||
| Non-interest bearing deposits | $ | 8,224,475 | $ | 9,114,512 | $ | 10,360,834 | $ | 10,758,353 | $ | 11,209,680 | |||||||
| Savings | 1,516,887 | 1,550,215 | 1,567,113 | 1,595,857 | 1,609,694 | ||||||||||||
| Interest checking and money market | 12,918,399 | 13,265,485 | 13,693,974 | 14,423,713 | 14,847,306 | ||||||||||||
| Certificates of deposit of less than $100,000 | 1,075,110 | 415,367 | 388,304 | 397,071 | 411,655 | ||||||||||||
| Certificates of deposit of $100,000 and over | 1,472,208 | 903,393 | 596,703 | 578,158 | 648,728 | ||||||||||||
| Total deposits | 25,207,079 | 25,248,972 | 26,606,928 | 27,753,152 | 28,727,063 | ||||||||||||
| Borrowings: | |||||||||||||||||
| Federal funds purchased | 507,165 | 493,721 | 143,630 | 51,929 | 113,128 | ||||||||||||
| Securities sold under agreements to repurchase | 2,206,612 | 2,418,726 | 2,260,263 | 2,199,866 | 2,258,184 | ||||||||||||
| Other borrowings | 1,617,952 | 551,267 | 179,552 | 2,010 | 2,029 | ||||||||||||
| Total borrowings | 4,331,729 | 3,463,714 | 2,583,445 | 2,253,805 | 2,373,341 | ||||||||||||
| Other liabilities | 598,915 | 112,052 | 28,745 | 123,691 | 139,986 | ||||||||||||
| Total liabilities | 30,137,723 | 28,824,738 | 29,219,118 | 30,130,648 | 31,240,390 | ||||||||||||
| Equity | 2,725,631 | 2,583,094 | 2,386,314 | 2,730,876 | 2,851,978 | ||||||||||||
| Total liabilities and equity | $ | 32,863,354 | $ | 31,407,832 | $ | 31,605,432 | $ | 32,861,524 | $ | 34,092,368 | |||||||
6
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE RATES
| (Unaudited) | For the Three Months Ended | ||||||||||||||||
| Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | |||||||||||||
| ASSETS: | |||||||||||||||||
| Loans: | |||||||||||||||||
Business (1) | 5.58 | % | 5.31 | % | 4.68 | % | 3.94 | % | 3.16 | % | |||||||
| Real estate — construction and land | 7.92 | 7.33 | 6.80 | 5.27 | 4.09 | ||||||||||||
| Real estate — business | 5.96 | 5.65 | 5.15 | 4.40 | 3.70 | ||||||||||||
| Real estate — personal | 3.68 | 3.61 | 3.45 | 3.36 | 3.27 | ||||||||||||
| Consumer | 5.63 | 5.31 | 4.77 | 4.17 | 3.62 | ||||||||||||
| Revolving home equity | 7.55 | 7.03 | 5.89 | 4.82 | 3.69 | ||||||||||||
| Consumer credit card | 13.77 | 13.68 | 12.64 | 12.05 | 11.32 | ||||||||||||
| Overdrafts | — | — | — | — | — | ||||||||||||
| Total loans | 5.84 | 5.56 | 5.03 | 4.37 | 3.72 | ||||||||||||
| Loans held for sale | 10.17 | 10.30 | 10.09 | 8.80 | 8.14 | ||||||||||||
| Investment securities: | |||||||||||||||||
| U.S. government and federal agency obligations | 3.42 | 1.90 | 2.01 | 4.51 | 4.93 | ||||||||||||
| Government-sponsored enterprise obligations | 2.38 | 3.21 | 2.36 | 2.36 | 2.39 | ||||||||||||
State and municipal obligations (1) | 2.04 | 2.26 | 2.29 | 2.27 | 2.30 | ||||||||||||
| Mortgage-backed securities | 2.09 | 2.06 | 1.88 | 1.93 | 1.99 | ||||||||||||
| Asset-backed securities | 2.08 | 2.01 | 1.96 | 1.62 | 1.35 | ||||||||||||
| Other debt securities | 1.86 | 1.93 | 1.89 | 1.93 | 1.97 | ||||||||||||
| Total available for sale debt securities | 2.19 | 2.07 | 1.97 | 2.09 | 2.08 | ||||||||||||
Trading debt securities (1) | 4.53 | 4.59 | 3.81 | 2.74 | 2.46 | ||||||||||||
Equity securities (1) | 23.25 | 23.24 | 28.44 | 27.11 | 26.90 | ||||||||||||
Other securities (1) | 9.40 | 7.11 | 6.67 | 7.09 | 22.38 | ||||||||||||
| Total investment securities | 2.37 | 2.18 | 2.07 | 2.18 | 2.36 | ||||||||||||
| Federal funds sold | 5.63 | 5.09 | 4.27 | 2.77 | 1.79 | ||||||||||||
| Securities purchased under agreements to resell | 1.99 | 1.94 | 2.36 | 1.72 | 1.03 | ||||||||||||
| Interest earning deposits with banks | 5.14 | 4.67 | 3.69 | 2.25 | .78 | ||||||||||||
| Total interest earning assets | 4.34 | 4.00 | 3.59 | 3.21 | 2.86 | ||||||||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||
| Savings | .05 | .05 | .06 | .04 | .04 | ||||||||||||
| Interest checking and money market | .93 | .61 | .38 | .20 | .06 | ||||||||||||
| Certificates of deposit of less than $100,000 | 3.78 | 1.39 | .73 | .41 | .20 | ||||||||||||
| Certificates of deposit of $100,000 and over | 3.93 | 2.98 | 1.42 | .60 | .29 | ||||||||||||
| Total interest bearing deposits | 1.29 | .71 | .40 | .21 | .07 | ||||||||||||
| Borrowings: | |||||||||||||||||
| Federal funds purchased | 5.06 | 4.59 | 3.56 | 2.41 | .79 | ||||||||||||
| Securities sold under agreements to repurchase | 3.09 | 2.93 | 2.29 | 1.37 | .48 | ||||||||||||
| Other borrowings | 5.24 | 4.94 | 4.02 | 1.78 | 2.37 | ||||||||||||
| Total borrowings | 4.13 | 3.49 | 2.48 | 1.39 | .50 | ||||||||||||
| Total interest bearing liabilities | 1.87 | % | 1.20 | % | .69 | % | .34 | % | .12 | % | |||||||
| Net yield on interest earning assets | 3.12 | % | 3.26 | % | 3.18 | % | 3.01 | % | 2.79 | % | |||||||
(1) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%.
7
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CREDIT QUALITY
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||
| (Unaudited) (In thousands, except ratios) | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES ON LOANS | ||||||||||||||||||||||||||
| Balance at beginning of period | $159,317 | $150,136 | $143,377 | $138,039 | $134,710 | $150,136 | $150,044 | |||||||||||||||||||
| Provision for credit losses on loans | 5,864 | 15,948 | 12,404 | 10,150 | 7,287 | 21,812 | (3,399) | |||||||||||||||||||
| Net charge-offs (recoveries): | ||||||||||||||||||||||||||
| Commercial portfolio: | ||||||||||||||||||||||||||
| Business | 165 | 230 | 496 | 461 | 19 | 395 | 96 | |||||||||||||||||||
| Real estate — construction and land | (115) | — | — | — | — | (115) | — | |||||||||||||||||||
| Real estate — business | (5) | (4) | (4) | (8) | (1) | (9) | (8) | |||||||||||||||||||
| 45 | 226 | 492 | 453 | 18 | 271 | 88 | ||||||||||||||||||||
| Personal banking portfolio: | ||||||||||||||||||||||||||
| Consumer credit card | 4,687 | 4,325 | 3,467 | 2,882 | 2,937 | 9,012 | 6,309 | |||||||||||||||||||
| Consumer | 1,273 | 1,275 | 1,522 | 827 | 633 | 2,548 | 1,441 | |||||||||||||||||||
| Overdraft | 517 | 978 | 230 | 703 | 425 | 1,495 | 783 | |||||||||||||||||||
| Real estate — personal | (6) | (11) | (40) | (15) | (41) | (17) | (19) | |||||||||||||||||||
| Revolving home equity | (20) | (26) | (26) | (38) | (14) | (46) | 4 | |||||||||||||||||||
| 6,451 | 6,541 | 5,153 | 4,359 | 3,940 | 12,992 | 8,518 | ||||||||||||||||||||
| Total net loan charge-offs | 6,496 | 6,767 | 5,645 | 4,812 | 3,958 | 13,263 | 8,606 | |||||||||||||||||||
| Balance at end of period | $158,685 | $159,317 | $150,136 | $143,377 | $138,039 | $158,685 | $138,039 | |||||||||||||||||||
| LIABILITY FOR UNFUNDED LENDING COMMITMENTS | $29,235 | $28,628 | $33,120 | $30,047 | $24,907 | |||||||||||||||||||||
NET CHARGE-OFF RATIOS (1) | ||||||||||||||||||||||||||
| Commercial portfolio: | ||||||||||||||||||||||||||
| Business | .01 | % | .02 | % | .04 | % | .03 | % | — | % | .01 | % | — | % | ||||||||||||
| Real estate — construction and land | (.03) | — | — | — | — | (.02) | — | |||||||||||||||||||
| Real estate — business | — | — | — | — | — | — | — | |||||||||||||||||||
| — | .01 | .02 | .02 | — | .01 | — | ||||||||||||||||||||
| Personal banking portfolio: | ||||||||||||||||||||||||||
| Consumer credit card | 3.38 | 3.15 | 2.46 | 2.08 | 2.19 | 3.27 | 2.36 | |||||||||||||||||||
| Consumer | .24 | .25 | .29 | .16 | .12 | .25 | .14 | |||||||||||||||||||
| Overdraft | 44.79 | 89.15 | 12.28 | 62.85 | 30.86 | 66.40 | 29.50 | |||||||||||||||||||
| Real estate — personal | — | — | (.01) | — | (.01) | — | — | |||||||||||||||||||
| Revolving home equity | (.03) | (.04) | (.04) | (.05) | (.02) | (.03) | — | |||||||||||||||||||
| .44 | .45 | .35 | .30 | .28 | .44 | .30 | ||||||||||||||||||||
| Total | .16 | % | .17 | % | .14 | % | .12 | % | .10 | % | .16 | % | .11 | % | ||||||||||||
| CREDIT QUALITY RATIOS | ||||||||||||||||||||||||||
| Non-accrual loans to total loans | .04 | % | .05 | % | .05 | % | .05 | % | .05 | % | ||||||||||||||||
| Allowance for credit losses on loans to total loans | .94 | .96 | .92 | .90 | .88 | |||||||||||||||||||||
| NON-ACCRUAL AND PAST DUE LOANS | ||||||||||||||||||||||||||
| Non-accrual loans: | ||||||||||||||||||||||||||
| Business | $4,732 | $6,361 | $6,751 | $5,645 | $6,314 | |||||||||||||||||||||
| Real estate — construction and land | — | — | — | — | — | |||||||||||||||||||||
| Real estate — business | 153 | 171 | 189 | 149 | 167 | |||||||||||||||||||||
| Real estate — personal | 1,276 | 1,269 | 1,366 | 1,390 | 1,436 | |||||||||||||||||||||
| Total | 6,161 | 7,801 | 8,306 | 7,184 | 7,917 | |||||||||||||||||||||
| Loans past due 90 days and still accruing interest | $15,351 | $14,800 | $15,830 | $12,538 | $11,909 | |||||||||||||||||||||
(1) Net charge-offs are annualized and calculated as a percentage of average loans (excluding loans held for sale).
8
COMMERCE BANCSHARES, INC.
Management Discussion of Second Quarter Results
June 30, 2023
For the quarter ended June 30, 2023, net income amounted to $127.8 million, compared to $119.5 million in the previous quarter and $115.8 million in the same quarter last year. The increase in net income compared to the previous quarter was primarily the result of higher non-interest income and investment securities gains coupled with a lower provision for credit losses, partly offset by lower net interest income and higher non-interest expense. The net yield on interest earning assets declined 14 basis points from the previous quarter to 3.12%. Average loans grew $265.2 million compared to the previous quarter, while average available for sale debt securities and average deposits declined $852.8 million and $41.9 million, respectively. For the quarter, the return on average assets was 1.56%, the return on average equity was 18.81%, and the efficiency ratio was 57.2%.
Balance Sheet Review
During the 2nd quarter of 2023, average loans totaled $16.7 billion, an increase of $265.2 million over the prior quarter, and $1.2 billion, or 7.6%, over the same quarter last year. Compared to the previous quarter, average balances of business, business real estate, and construction loans grew $101.3 million, $62.5 million, and $39.4 million, respectively. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $8.9 million, compared to $3.2 million in the prior quarter.
Total average available for sale debt securities decreased $852.8 million compared to the previous quarter to $11.0 billion, at fair value. The decrease in investment securities was mainly the result of lower balances of mortgage-backed, other asset-backed, and state and municipal securities. During the 2nd quarter of 2023, the unrealized loss on available for sale securities increased $109.2 million to $1.4 billion, at period end, and sales, maturities and pay downs were $702.3 million. At June 30, 2023, the duration of the available for sale investment portfolio was 3.9 years. The Company does not have any investment securities classified as held-to-maturity.
Total average deposits decreased $41.9 million this quarter compared to the previous quarter. The decrease in deposits mostly resulted from lower demand deposits and interest checking and money market deposits of $890.0 million and $347.1 million, respectively. These decreases were partly offset by higher certificate of deposit balances of $1.2 billion. Compared to the previous quarter, total average commercial, consumer, and wealth deposits declined $256.5 million, $189.5 million, and $123.4 million, respectively. These decreases were offset by $523.5 million of average brokered deposits, which are not reported in the Company’s operating segments. The average loans to deposits ratio was 66.2% in the current quarter and 65.0% in the prior quarter. The Company’s average borrowings, which included customer repurchase agreements of $2.2
billion, were $4.3 billion in the 2nd quarter of 2023 and $3.5 billion in the prior quarter.
Net Interest Income
Net interest income in the 2nd quarter of 2023 amounted to $249.5 million, a decrease of $2.1 million compared to the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter decreased $1.7 million from the previous quarter to $251.8 million. The decrease in net interest income was mostly due to higher interest expense, mostly offset by higher interest earned on loans and deposits with banks. The net yield (FTE) on earning assets decreased to 3.12%, from 3.26% in the prior quarter.
Compared to the previous quarter, interest income on loans (FTE) increased $17.6 million, due to higher average rates earned on all loan categories, coupled with higher average balances of all loan categories, except consumer credit cards. The average yield (FTE) on the loan portfolio increased 28 basis points to 5.84% this quarter.
Interest income on investment securities (FTE) increased $2.2 million compared to the prior quarter, due to higher rates earned, partly offset by lower average balances. Interest income earned on U.S. government and federal agency securities increased due to higher rates earned, which included the impact of $4.1 million in higher inflation income from Treasury inflation-protected securities this quarter. At June 30, 2023, the Company recorded a $1.7 million adjustment to premium amortization, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities. The average yield (FTE) on total investment securities was 2.37% in the current quarter, compared to 2.18% in the previous quarter.
Compared to the previous quarter, interest income on deposits with banks increased $19.9 million, mostly due to higher average balances of $1.5 billion coupled with higher average rates earned. The average yield on deposits with banks was 5.14% in the current quarter, compared to 4.67% in the prior quarter.
Interest expense increased $41.1 million, mostly due to higher rates paid on deposits and higher Federal Home Loan Bank (FHLB) borrowings. The average rate paid on interest bearing deposits totaled 1.29% in the current quarter compared to .71% in the prior quarter. Interest expense on deposits increased $26.4 million this quarter compared to the previous quarter. Interest expense on borrowings increased $14.8 million, due to a 64 basis point increase in the average rate paid coupled with higher average borrowings of $868.0 million. The overall rate paid on interest bearing liabilities was 1.87% in the current quarter compared to 1.20% in the prior quarter.
9
COMMERCE BANCSHARES, INC.
Management Discussion of Second Quarter Results
June 30, 2023
Non-Interest Income
In the 2nd quarter of 2023, total non-interest income amounted to $147.6 million, an increase of $8.2 million compared to the same period last year and an increase of $10.0 million compared to the prior quarter. The increase in non-interest income compared to the same period last year was mainly due to higher bank card fees, letter of credit fees, and an increase in fair value adjustments recorded on the Company’s deferred compensation plan assets, which are held in a trust and recorded as both an asset and liability, affecting both other income and other expense. These increases were partly offset by lower deposit fees. The increase in non-interest income compared to the prior quarter was mainly due to higher bank card fees, letter of credit fees, trust fees, swap fees, and a gain on the sale of real estate recorded in the current quarter.
Total net bank card fees in the current quarter increased $5.9 million, or 13.3%, compared to the same period last year, and increased $3.1 million compared to the prior quarter. Net corporate card fees increased $4.5 million, or 18.3%, over the same quarter of last year mainly due to higher interchange fee income and lower rewards expense. Net debit card fees increased $807 thousand, or 7.7%, net merchant fees increased $425 thousand, or 8.6%, and net credit card fees increased $100 thousand, or 2.7%. Total net bank card fees this quarter were comprised of fees on corporate card ($29.2 million), debit card ($11.3 million), merchant ($5.4 million) and credit card ($3.8 million) transactions.
In the current quarter, trust fees increased $473 thousand, or 1.0%, over the same period last year, mostly resulting from higher private client trust fees. Compared to the same period last year, deposit account fees decreased $2.9 million, or 11.5%, mainly due to lower overdraft and return item fees of $2.9 million.
Other non-interest income increased over the same period last year primarily due to higher swap fees of $1.1 million, higher letter of credit fees of $2.7 million, a $3.4 million increase in the deferred compensation adjustment previously mentioned, and a gain on the sale of real estate of $1.1 million recorded in the current quarter. These increases were partly offset by a decrease in tax credit sales fees of $1.5 million and the receipt of a $2.2 million life insurance death benefit recorded in the 2nd quarter of 2022. For the 2nd quarter of 2023, non-interest income comprised 37.2% of the Company’s total revenue.
Investment Securities Gains and Losses
The Company recorded net securities gains of $3.4 million in the current quarter, compared to losses of $306 thousand in the prior quarter and gains of $1.0 million in the 2nd quarter of 2022. Net securities gains in the current quarter primarily resulted from net fair value gains of $9.1 million on the Company’s private equity portfolio, partly offset by losses of $5.4
million realized on sales of available for sale debt securities.
Non-Interest Expense
Non-interest expense for the current quarter amounted to $227.6 million, compared to $213.5 million in the same period last year and $224.1 million in the prior quarter. The increase in non-interest expense compared to the same period last year was mainly due to higher salaries and employee benefits expense, FDIC insurance expense, data processing and software expense, deconversion expense, travel and entertainment expense, and the deferred compensation adjustment previously mentioned. The increase in non-interest expense compared to the prior quarter was mainly due to higher full-time salaries expense, marketing expense, travel and entertainment expense and deconversion expense, partly offset by lower employee benefits expense and miscellaneous losses.
Compared to the 2nd quarter of last year, salaries and employee benefits expense increased $3.2 million, mostly due to higher full-time salaries expense of $6.9 million, or 7.6%. This increase was partly offset by lower incentive compensation of $5.7 million, largely the result of a $5.4 million accrual for special bonuses in 2022 that did not reoccur in 2023. Full-time equivalent employees totaled 4,680 and 4,579 at June 30, 2023 and 2022, respectively.
Compared to the same period last year, data processing and software expense increased $1.1 million due to higher bank card fees expense and increased costs for service providers. Other non-interest expense increased $8.4 million, mostly due to growth in deferred compensation, FDIC insurance, and travel and entertainment expense of $3.4 million, $1.8 million, and $797 thousand, respectively. Additionally, the Company recorded $2.1 million in deconversion expenses relating to the transition of Commerce Financial Advisors support to LPL Financial’s Institution Services platform.
Income Taxes
The effective tax rate for the Company was 22.0% in the current quarter, 21.6% in the previous quarter, and 21.7% in the 2nd quarter of 2022.
Credit Quality
Net loan charge-offs in the 2nd quarter of 2023 amounted to $6.5 million, compared to $6.8 million in the prior quarter and $4.0 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .16% in the current quarter, .17% in the previous quarter, and .10% in the 2nd quarter of last year. Net loan charge-offs on personal banking loans decreased $90 thousand to $6.5 million, mainly due to lower overdraft loan net charge-offs, partly offset by higher consumer credit card loan net charge-offs.
10
COMMERCE BANCSHARES, INC.
Management Discussion of Second Quarter Results
June 30, 2023
In the 2nd quarter of 2023, annualized net loan charge-offs on average consumer credit card loans were 3.38%, compared to 3.15% in the previous quarter, and 2.19% in the same quarter last year. Consumer loan net charge-offs were .24% of average consumer loans in the current quarter, .25% in the prior quarter, and .12% in the same quarter last year.
At June 30, 2023, the allowance for credit losses on loans totaled $158.7 million, or .94% of total loans, and decreased $632 thousand compared to the prior quarter. Additionally, the liability for unfunded lending commitments at June 30, 2023 was $29.2 million, an increase of $607 thousand compared to the liability at March 31, 2023.
At June 30, 2023, total non-accrual loans amounted to $6.2 million, a decrease of $1.6 million compared to the previous quarter. At June 30, 2023, the balance of non-accrual loans, which represented .04% of loans outstanding, included business loans of $4.7 million, personal real estate loans of $1.3 million, and business real estate loans of $153 thousand. Loans more than 90 days past due and still accruing interest totaled $15.4 million at June 30, 2023.
Liquidity
During the 2nd quarter of 2023, the Company increased its deposit balance at the Federal Reserve Bank (FRB) by $1.2 billion to $2.6 billion. The change in the balance at the FRB was mostly the result of a $1.2 billion increase in total deposits and $702.3 million of sales, maturities, and paydowns in the available for sale debt securities portfolio, partly offset by a $500.0 million decrease in FHLB advances, a $220.8 million decrease in net fed funds purchased, and growth of $421.0 million in loan balances.
The Company regularly pledges loans and securities to the FRB and at June 30, 2023, the Company’s pledging resulted in a total borrowing capacity of $5.0 billion, or an increase of $1.2 billion compared to March 31, 2023. The Company did not have any borrowings from the FRB’s Discount Window or the Bank Term Funding Program during the current quarter. The Company also pledges loans and securities and borrows from the FHLB. During the 2nd quarter of 2023, the Company reduced its outstanding borrowings from the FHLB by $500.0 million to $1.0 billion and had $1.1 billion of available borrowing capacity at June 30, 2023. Additionally, the Company pledges portions of its investment securities portfolio to secure public fund deposits, trust funds, and securities sold under agreements to repurchase.
The Company has an available for sale debt securities portfolio with a fair market value of $10.4 billion at June 30, 2023. Approximately $2.0 billion is expected to mature or pay down over the next 12 months. At June 30, 2023, the Company had pledged $8.1 billion of the securities portfolio. The Company
also has a portfolio of $825.0 million in securities purchased under agreements to resell, of which $700.0 million are expected to mature over the next 12 months.
Other
During the 2nd quarter of 2023, the Company paid a cash dividend of $.27 per common share, representing a 7.1% increase over the same period last year. The Company purchased 6,205 shares of treasury stock during the current quarter at an average price of $52.61. Additionally, the Company completed its acquisition of L.J. Hart and Company, a municipal bond underwriter and advisor, in June 2023.
Forward Looking Information
This information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions, and other statements that are not historical facts. Such statements are based on current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements.
11
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 2nd Quarter 2023 PEOPLE, GROWTH AND POSSIBILITIES
CAUTIONARY STATEMENT A number of statements we will be making in our presentation and in the accompanying slides are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements of the Corporation’s plans, goals, objectives, expectations, projections, estimates and intentions. These forward- looking statements involve significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Corporation’s control). Factors that could cause the Corporation’s actual results to differ materially from such forward- looking statements made herein or by management of the Corporation are set forth in the Corporation’s 2022 Annual Report on Form 10-K, 1ST Quarter 2023 Report on Form 10- Q and the Corporation’s Current Reports on Form 8-K. 2
COMMERCE BANCSHARES 158 YEARS IN BUSINESS FULL-SERVICE BANKING FOOTPRINT 147 full-service branches and 288 ATMs St. Louis Kansas City Springfield Central Missouri Central Illinois Wichita Tulsa Oklahoma City Denver COMMERCIAL OFFICES Cincinnati Nashville Dallas Des Moines Indianapolis Grand Rapids Houston U.S. PRESENCE Extended Commercial Market Area Commercial Payments Services Offered in 48 states across the U.S. Sources: 1S&P Global Market Intelligence – Regulated U.S. depositories which includes commercial banks, bank holding companies, and credit unions, rankings as of 3/31/2023; 2Includes loans held for sale; 3Moody’s Sector Profile: Banks, May 24, 2023, Baseline Credit Assessment (BCA) reflects a bank’s standalone credit strength; Company reports and filings, information as of 6/30/2023 unless otherwise noted. 3 $32.8 BILLION TOTAL ASSETS 40TH LARGEST U.S. BANK BASED ON ASSET SIZE1 $6.1 BILLION MARKET CAP 17TH LARGEST U.S. BANK BASED ON MARKET CAP1 $63.4 BILLION TOTAL TRUST ASSETS UNDER ADMINISTRATION 20TH LARGEST AMONG BANK-MANAGED TRUST COMPANIES BASED ON AUM1 14.5% TIER 1 COMMON RISK- BASED CAPITAL RATIO 4TH HIGHEST AMONG TOP 50 U.S. BANKS BASED ON ASSET SIZE1 a1 BASELINE CREDIT ASSESSMENT3 1 of 4 MOODY’S RANKS COMMERCE AMONG THE TOP 4 BANKS IN THE COUNTRY $25.9 BILLION TOTAL DEPOSITS $17.0 BILLION TOTAL LOANS2 $10.4 BILLION COMMERCIAL CARD VOLUME 18.8% RETURN ON AVERAGE COMMON EQUITY YTD 7TH YTD ROACE FOR THE TOP 50 U.S. BANKS BASED ON ASSET SIZE1 AS OF DECEMBER 31, 2022 AS OF MARCH 31, 2023
4 TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Balanced earnings profile, fee revenue at 36%1 of total revenue, bolstered by growing wealth and national payments businesses Deposit Franchise $24.2 billion in low-cost, diverse deposits2 with peer-leading historical deposit betas Continued Long-Term Investments Core banking system implementation, Enterprise Digital, Expansion Markets, Wealth Management, Consistent Earnings & Shareholder Value Nearly 9% total annualized return to shareholders over the last 15 years, outperforming the annualized KBW Regional Bank Index return of 6%3 Capital Management Strong capital ratios, 55th consecutive year of common dividend increases4 Credit Quality Conservative risk profile drives outperformance across credit cycles 1As of YTD 6/30/2023; 2Excludes certificates of deposit greater than $100,000, period-end balance as of 6/30/2023; 3As of 6/30/2023; 4Based on 1Q2023 paid dividend
$1.02 EPS 5 • Built additional cushion of liquidity in Q2 – (Average cash at Fed of $2.3B) • Grew period end total deposits over Q1 by $1.2B ($904MM short-term brokered). • Net interest margin decreased 14 bps from Q1. • Net interest margin was flat, excluding short-term liquidity build. • Net interest income declined 1% to $250MM. • Total cost of deposits increased 42 bps to .87%. • Average loans up 1.6% over Q1. • Net charge-offs of .16% and non-accrual loans of .04%. • Completed acquisition of LJ Hart & Company. Highlights Well-positioned for current environment 2Q2023 HIGHLIGHTS $169.5 million PPNR1 $127.8 million Net Income 18.81% ROACE 1.56% ROAA 57.22% Efficiency Ratio 1See the non-GAAP reconciliation on page 24
Quarterly Average Balances 2Q23 vs. 1Q23 2Q23 vs. 2Q22 $ in millions 2Q23 $ Change % Change $ Change % Change Commercial $10,748.4 $203.1 2% $974.5 10% Consumer 5,920.6 62.1 1% 209.0 4% Total Loans $16,669.0 $265.2 2% $1,183.5 8% Investment Securities $11,289.5 $(808.4) (7)% $(3,248.8) (22)% Interest Earning Deposits with Banks $2,284.2 $1,474.2 182% $1,035.2 83% Deposits $25,207.1 $(41.9) (0)% $(3,520.0) (12)% Book Value per Share1 $21.53 $.02 0% $.30 1% BALANCE SHEET HIGHLIGHTS 6 1For the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022 Loans: Quarterly growth in all categories except consumer card. Investment securities: Continues to decline. No Q2 purchases. Interest Earning Deposits with Banks: Increased liquidity with more cash at Fed. Average Deposits: Nearly flat from Q1.
$17.5 $16.1 $11.2 $9.1 $8.2 1Q232Q22 $17.0 2Q23 $28.7 $25.2 $25.2 -12% $9.8 $10.5 $10.8 $5.7 $5.9 $5.9 2Q22 1Q23 2Q23 $15.5 $16.4 $16.7 BALANCE SHEET 7 Loans Consumer Loans Commercial Loans Loan Yield Deposits QTD Average Balances $ billions Non-Interest Bearing Interest Bearing Deposit Interest Bearing Deposit Yield QTD Average Balances $ billions 3.72% 5.56% 5.84% .07% .71% 1.29% +8%
LOAN PORTFOLIO 8 $ in 000s 6/30/2023 3/31/2023 6/30/2022 QoQ YoY Business $5,906,493 $5,704,467 $5,441,592 3.5% 8.5% Construction 1,451,783 1,437,419 1,266,260 1.0% 14.7% Business Real Estate 3,621,222 3,486,543 3,215,578 3.9% 12.6% Personal Real Estate 2,980,599 2,952,042 2,836,835 1.0% 5.1% Consumer 2,110,605 2,094,389 2,089,592 .8% 1.0% Revolving Home Equity 303,845 295,478 271,854 2.8% 11.8% Consumer Credit Card 574,755 558,669 558,102 2.9% 3.0% Overdrafts 7,237 6,515 6,814 11.1% 6.2% Total Loans $16,956,539 $16,535,522 $15,686,627 2.5% 8.1% Period-End Balances $ in 000s 6/30/2023 3/31/2023 6/30/2022 QoQ YoY Business $5,757,388 $5,656,104 $5,385,181 1.8% 6.9% Construction 1,450,196 1,410,835 1,225,267 2.8% 18.4% Business Real Estate 3,540,851 3,478,382 3,163,508 1.8% 11.9% Personal Real Estate 2,960,962 2,933,750 2,825,578 .9% 4.8% Consumer 2,098,523 2,067,385 2,070,560 1.5% 1.4% Revolving Home Equity 300,623 296,748 272,280 1.3% 10.4% Consumer Credit Card 555,875 556,223 537,681 -.1% 3.4% Overdrafts 4,630 4,449 5,524 4.1% -16.2% Total Loans $16,669,048 $16,403,876 $15,485,579 1.6% 7.6% QTD Average Balances
Real Estate - Business Loans: Office Outstanding Balances by Geography1 Real Estate - Business Loans % of Total Loans Owner – Occupied 6.8% Office 3.0% Industrial 3.3% Retail 2.1% Multi-family 1.8% Hotels 1.5% Farm 1.2% Senior living 1.0% Other .7% Total 21.4% COMMERCIAL REAL ESTATE BREAKDOWN 9 31.7% 13.9% 15.6% 9.9% 8.4% 6.9% 5.4% 4.7% Hotels Owner- occupied Farm Office 3.5% Industrial Retail Multi-family Senior living Other Real Estate - Business Loans $3.6 billion 1Geography determined by location of collateral. Includes only loans with a balance of $1 million and above, which represents 93% of outstanding balance of the stabilized, non-owner occupied office loans 2Critized is defined as special mention, substandard, and non-accrual loans 3LTV based on current exposure and property value at time of most recent valuation. Includes only loans with a balance of $1 million and above, which represents 93% of outstanding balance of the stabilized, non- owner occupied office loans Real Estate - Business Loans: Office Attributes as of June 30, 2023 47.7% 10.8% 20.9% 7.6% IL MO TX 5.0% CO KS 2.8% OK 2.0% 2.4% OH Other Midwest States 0.8% Other States • TTM Net Charge-offs on Office loans: .00% • Delinquent Office Loans: .00% • Non-Performing Office Loans: .00% • Criticized2 Office Loans to Total Office Loans: .66% • Weighted Average LTV of Office Loans: 61.0%3 • Percent of loans at floating interest rate: 75.6%
10 INCOME STATEMENT HIGHLIGHTS $140 $158 $232 $214 2Q22 $372 $137 $165 $252 $224 1Q23 $389 $148 $170 $250 $228 2Q23 $398 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 2Q23 Comparison vs. 2Q22 7.1% vs. 1Q23 2.7% Pre-Tax, Pre-Provision Net Revenue (PPNR) Revenue was up 2.0% over 1Q and up 6.8% over the same period last year. Expenses were up 1.6% over 1Q and up 6.6% over the same period last year. See the non-GAAP reconciliation on page 24
2Q23 vs. 1Q23 2Q23 vs. 2Q22 $ in millions 2Q23 $ Change % Change $ Change % Change Net Interest Income $249.5 $(2.1) -1% $17.2 7% Non-Interest Income 147.6 10.0 7% 8.2 6% Non-Interest Expense 227.6 3.5 2% 14.1 7% Pre-Tax, Pre-Provision Net Revenue1 $169.5 $4.4 3% $11.2 7% Investment Securities Gains, Net $3.4 $3.7 1280% $2.4 230% Provision for Credit Losses $6.5 $(5.0) (44)% $(.7) (10)% Net-Income Attributable to Commerce Bancshares, Inc. $127.8 $8.3 7% $12.0 10% For the three months ended1 2Q23 1Q23 2Q23 vs. 1Q23 2Q22 2Q23 vs. 2Q22 Net Income per Common Share – Diluted $1.02 $.95 7% $.92 11% Net Yield on Interest Earning Assets 3.12% 3.26% (14) bps 2.79% 33 bps INCOME STATEMENT 111See the non-GAAP reconciliation on page 24
NON-INTEREST INCOME HIGHLIGHTS 12 2Q23 vs. 1Q23 2Q23 vs. 2Q22 $ in millions 2Q23 $ Change % Change $ Change % Change Bank Card Transaction Fees $49.7 $3.1 7% 5.9 13% Trust Fees 47.3 1.9 4% .5 1% Deposit Account Charges and Other Fees 22.6 .9 4% (2.9) (11)% Capital Market Fees 2.5 (.8) (24)% (.8) (24)% Consumer Brokerage Services 4.7 (.4) (8)% (.4) (8)% Loan Fees and Sales 2.7 .1 6% $(.5) (16)% Other 18.0 $5.2 40% $6.5 56% Total Non-Interest Income $147.6 $10.0 7% $8.2 6% Bank Card : Corporate card fees increased over prior year due to higher interchange fee income and lower rewards expense. Other: Increased over prior year due to higher swap fees, letter of credit fees, deferred compensation adjustment and a gain on the sale of real estate.
NON-INTEREST EXPENSE HIGHLIGHTS 13 2Q23 vs. 1Q23 2Q23 vs. 2Q22 $ in millions 2Q23 $ Change % Change $ Change % Change Salaries and Employee Benefits $145.4 $1.1 1% 3.2 2% Net Occupancy 13.0 .2 2% .5 4% Equipment 4.9 .0 0% .1 3% Supplies and Communication 4.6 .0 1% .2 6% Data Processing and Software 28.7 .6 2% 1.1 4% Marketing 6.4 .9 16% .5 9% Other 24.6 .7 3% 8.4 52% Total Non-Interest Expense $227.6 $3.5 2% $14.1 7% Salaries and employee benefits: Increased over prior year due to higher full-time salaries, partially offset by lower incentive compensation, largely due to one-time special bonuses in 2022. Other: Increased over prior year due to growth in deferred compensation, FDIC insurance and travel and entertainment expense. Additionally, $2.1 million deconversion expense relating to the transition of Commerce Financial Advisors support to a vendor platform.
14 LIQUIDITY AND CAPITAL
LIQUIDITY AND CAPITAL HIGHLIGHTS 15 • $2.6B of cash at Federal Reserve Bank (FRB) at Q2. • FHLB advances declined from $1.5B to $1.0B. • AFS debt securities portfolio duration of 3.9 years. • Cash flows from maturities and paydowns of investments and resale agreements of approximately $2.7B expected over the next twelve months. – AFS debt securities of $2.0 billion – Securities purchased under agreements to resell of $700 million Liquidity / Borrowing • TCE/TA of 7.70%, a decrease of .22% from Q1. Tier 1 leverage at 10.46%. • AOCI loss increased 10% from $(940MM) at Q1 to $(1.0B) at Q2. • No Held-To-Maturity securities. Capital • Average loan to deposit ratio of 66%. • Uninsured deposits1 of 32% of total deposits at Q2. • Added brokered deposits of $904MM to boost short-term liquidity levels. Deposits 1Excludes affiliate and collateralized deposits
2Q2320202019 1Q232021 $1.8 2022 $2.3 $3.0 $2.8 $2.5 $2.4 $2.4 1Q23 2Q23 $2.3 DEPOSIT BALANCE TRENDS Segment view $ in billions 16 2022 2Q231Q23 $9.9 $12.0 $7.8 2019 20212020 $11.9 $10.3 $10.1 $10.2 1Q2320202019 2021 2022 $11.3 2Q23 $12.8 $13.4 $12.5 $12.3 Commercial Consumer Wealth Average Balance Period End $12.7 1Q23 2Q23 $12.3 Period EndAverage Balance Average Balance Period End Segment balances do not include brokered deposits. 2019 through 2022 are full year average balances. 1Q23 2Q23 $10.3 $9.5
DEPOSIT PORTFOLIO CHARACTERISTICS 17 Percent of accounts under $250,000 Percent of deposits ($) uninsured1 Average balance of accounts <$250,000 Average balance of accounts 99% 32% $15,547 $27,262 Uninsured Deposit Analysis $ in billions 6/30/2023 Uninsured Deposits $ 10.4 Less: Affiliate Deposits $ 0.3 Less: Collateralized Deposits $ 1.9 Uninsured deposits1 $ 8.2 Total Deposits $ 25.9 Uninsured deposits1 as % of Total Deposits 32% 1Excludes affiliate and collateralized deposits
FHLB ADVANCES & BROKERED CDS BY MATURITY $500MM $500MM $503MM $401MM $1,003MM 3Q23 4Q23 $901MMBrokered CDs FHLB Advance Weighted average rate 5.21% 5.21% • Short-term, wholesale funding added providing ample liquidity cushion • FHLB advances and brokered CDs mature by December 31, 2023 18
Hedging actions: Entered into three floor contracts (indexed to 1 Month SOFR) to hedge the risk of declining interest rates on floating rate commercial loans. The contracts have a term of 6 years. • 3Q2022: One 2.5% floor contract with a notional value of $500 million. The contract begins 1/2024. • 4Q2022: One 3.0% floor contract with a notional value of $500 million. The contract begins 4/2024. • 1Q2023: One 3.5% floor contract with a notional value of $500 million. The contract begins 7/2024. WELL-POSITIONED FOR MULTIPLE RATE ENVIRONMENTS 19 Opportunities to enhance and protect NII in a rising rate environment. • Net yield on interest earning assets decreased 14 bps from Q1 to 3.12%. • Loan yield increased 28 bps over Q1 to 5.84%. • Total deposit costs increased 42 bps over Q1 to .87%. • As of December 31, 2022, 56% of loans were variable rate, (64% commercial, 42% consumer). • Large core deposit base and historically low betas. Cost of Total Deposits & Deposit Beta: Prior & Current Fed Cycle Cost of Total Deposits Before Fed Rate Increases End of Fed Rate Increases / Current Deposit Beta1 Commerce (3Q2015 – 2Q2019) .12% .38% 12% Peer Median (3Q2015 – 2Q2019) .23% .85% 27% Commerce (4Q2021 – 2Q2023) .03% .87% 17% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Quarter in the Fed Cycle Source: S&P Global Market Intelligence 1 Fed Rate increase cycle from 3Q2015 through 2Q2019, +225 bps; Fed Rate increase cycle from 4Q2021 through 2Q2023, +500 bps Effective Fed Funds Rate (3Q2015 - 2Q2019) Effective Fed Funds Rate (4Q2021 - Current) 3Q2015 / 4Q2021
9% 13% 51% 23% 4% Composition of AFS Portfolio Treasury & agency Municipal MBS Other asset backed Corporate HIGH QUALITY, HIGHLY LIQUID AND DIVERSE INVESTMENT PORTFOLIO 1Excludes inflation effect on TIPs; 2Tax equivalent yield QTD – June 30, 2023 Avg Rate Duration (yrs) Treasury & agency1 1.22% 2.0 Municipal 2.04%2 5.6 MBS 2.09% 5.2 Other asset-backed 2.08% 1.2 Corporate 1.86% 3.8 Total 2.19% 3.9 20 Total available for sale securities Average balance: $11.0 billion, at fair value As of June 30, 2023
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 21 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of March 31, 2023 2Period-end balances, as of June 30, 2023 3Includes loans held for sale, for the quarter ended June 30, 2023 15.6% 14.5% 13.7% 12.6% 12.5% 12.2% 12.1% 11.9% 11.6% 11.1% 10.6% 10.6% 10.6% 10.6% 10.5% 10.5% 10.4% 10.1% 10.1% 10.1% ONB PB CBSH CADE BOKF UCBI UBSI CFR HWC FNB SFNC FIBK FULT PNFP SSB OZK ABCB ASB WTFC UMBF Peer Median: 11.1% Core Deposits $22.6 Billion2 Large, stable deposit base Loan to Deposit Ratio Total Deposits 66% Average Loan to Deposit Ratio182% Peer Average Commerce 87%13% Core Deposits - Non-Interest Bearing - Interest Checking - Savings and Money Market Certificates of Deposit
$4.0 $6.8 $6.5 $2.2 $6.1 2Q232Q22 1Q23 MAINTAINING STRONG CREDIT QUALITY 22 Net Loan Charge-Offs (NCOs) $ in millions NCOs - Peer Average NCOs- CBSH NCO/Average Loans1 - CBSH $138.0 $159.3 $158.7 $256.0 $280.5 2Q232Q22 1Q23 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - CBSH ACL - Peer Average ACL / Total Loans - CBSH $7.9 $7.8 $6.2 $93.1 $93.2 1Q232Q22 2Q23 Non-Accrual Loans (NALs) $ in millions NALs - Peer Average NALs - CBSH 17.4x 20.4x 25.8x 5.0x 4.6x 2Q232Q22 1Q23 Allowance for Credit Losses on Loans (ACL) to NALs ACL / NALs - CBSH ACL / NALs - Peer AverageNALs / Total Loans - CBSH NCO/Average Loans1 – Peer Average .05% NALs / Total Loans – Peer Average .05% .04% .43% .38% ACL / Total Loans – Peer Average .88% .96% .94% 1.17% 1.17% .10% .17% .16% .04% .10% Percentages are illustrative and not to scale; Peer Banks include: ABCB, ASB, BOKF, CADE, CFR, FIBK, FNB, FULT, HWC, ONB, OZK, PB, PNFP, SFNC, SSB, UBSI, UCBI, UMBF, WTFC 1As a percentage of average loans (excluding loans held for sale)
ALLOCATION OF ALLOWANCE 23 CECL allowances reflect the economic and market outlook March 31, 2023 June 30, 2023 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 49.5 .87% $ 47.1 .80% Bus R/E 27.7 .80% 29.9 .83% Construction 31.4 2.19% 31.0 2.14% Commercial total $ 108.6 1.02% $ 108.0 .98% Consumer 11.5 .55% 11.5 .55% Consumer CC 25.9 4.64% 26.7 4.65% Personal R/E 11.5 .39% 10.7 .36% Revolving H/E 1.7 .58% 1.6 .52% Overdrafts .1 1.84% .1 1.92% Consumer total $ 50.7 .86% $ 50.7 .85% Allowance for credit losses on loans $ 159.3 .96% $ 158.7 .94% 1.47% 1.44% 1.35% 1.22% 1.07% 0.88% 0.90% 0.92% 0.96% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60%$250 $150 $200 $100 2Q $143.4$139.6 0.95% $171.7 1Q 3Q $240.7$236.4 $220.8 $159.3 4Q $200.5 $172.4 1/1 1Q 2Q $162.8 3Q $150.0 0.99% 3Q4Q 2Q $134.7 0.87% 1Q $138.0 2Q 4Q 1Q $158.7 $150.1 0.94% 1.10% 1.14% Allowance for Credit Losses (ACL) on Loans ACL - Loans (left) ACL / Total Loans (right) $ in millions 202220212020 2023
NON-GAAP RECONCILIATIONS 24 For The Three Months Ended (DOLLARS IN THOUSANDS) Jun. 30, 2023 Mar. 31, 2023 Jun. 30, 2022 A Net Interest Income $ 249,538 $ 251,623 $ 232,385 B Non-Interest Income $ 147,605 $ 137,612 $ 139,427 C Non-Interest Expense $ 227,611 $ 224,107 $ 213,505 Pre-Provision Net Revenue (A+B-C) $ 169,532 $ 165,128 $ 158,307 Pre-tax, Pre-provision Net Revenue
